Representations are statements of fact that are made by each party to an agreement in order to remove uncertainties and induce the other party or parties to enter the transaction. For example, each party typically represents that it is legally authorized to enter into, and perform its obligations under, an agreement. Representations should be limited to statements of fact, and should not contain forward-looking statements or obligations (which are usually referred to as “covenants” and dealt with separately).
If a party’s representations turn out not to have been true when made – known as a failure of that party’s representations or a misrepresentation – then the other party will have rights and remedies as specified in the agreement.
In a project involving multiple sellers, the sellers may want to represent that the project’s governance mechanisms facilitate full, prior, and informed consent, enhance transparency or equity, or increase the likelihood of project success. Furthermore, if a sellers’ representative is used, it should represent that it was legally appointed, after full and fair disclosure, by all participating landholders. PES sellers may also represent that they are legally entitled to sell ecosystem services credits from the project area under applicable local and national law.
In the context of a government PES program, the participant's application and associated documents will generally contain statements of fact that are equivalent to the representations in a private agreement. Within the participation agreement, the participant may make a declaration that all information provided as part of the application was true and correct, as shown in example 2, below.
Example 1 (private carbon emissions reduction purchase agreement)
Example 2 (participation agreement for government REDD+ program)
These Clauses are:
Not very customizable - moderately customizable
Disclaimer: Materials on this site are meant to highlight issues that should be considered in PES transactions, not to provide a substitute for experienced legal counsel. It will be essential to engage legal counsel in conjunction with any PES transaction to ensure that any agreements reflect the latest developments in the field and comply with current local and national legislation.
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